Coronavirus policies around the world – and how South Africa compares

In an effort to curb the effect of Covid-19 on businesses and economies, governments across the globe have undertaken to adopt and amend various pieces of legislation which offer financial and social support.

“As yet, South Africa has not followed suit from an insolvency and business rescue perspective,” said law firm Cliffe Dekker Hofmeyr. “The question is, to what extent can we expect similar policy changes going forward?”

Below the firms looked at some of the policies introduced by other countries, and how they stack up to South Africa.

The United States

With the World Health Organisation warning that the US has the potential to become the new epicentre of the Covid-19 pandemic, there have been some noteworthy policy changes adopted in different states and jurisdictions in an effort to alleviate the effects of the Covid-19 pandemic.

The CARES Act (Coronavirus Aid, Relief and Economic Security) has been adopted in the US to support both businesses and individuals through government funding schemes.

The CARES Act has provided for relief in many areas including:

  • Paycheque Protection, allowing for eligible businesses to maintain their payroll and certain overhead expenses through the period of emergency; and
  • Allowing the deferral of employer taxes for 2020, with 50% of payroll tax payments for 2020 being due in 2021 and the remaining 50% being due in 2022.

Other policy changes include:

  • The Federal Reserve (Fed) has reduced interest rates to essentially zero. The rate of emergency lending at the discount window for banks has been reduced by 125 basis points to 0.25% and the term of loans lengthened to 90 days;
  • The Fed also cut the reserve requirements for many banks to zero; and
  • There have been many Loan Mortgage Corporations that have implemented a 60-day suspension of foreclosures/evictions and plans to reduce/suspend mortgage payments for up to twelve months for those affected by Covid-19.

The UK 

The UK has adopted a series of temporary measures to combat the disruption caused by Covid-19. These include:

  • The Monetary Policy Committee voted to cut bank rates to 0.1%;
  • Subject to eligibility, an allowance for a three-month VAT payment deferment has been adopted;
  • Business rates holidays for retail, hospitality and leisure businesses have been extended for the 2020 and 2021 tax year;
  • The Coronavirus Business Interruption Loan Scheme has been temporarily introduced in order to provide loans, overdraft facilities and other financing options to SMEs;
  • The Bank of England will, under the new Covid-19 Financing Facility, buy short term debt from larger companies, allowing companies to finance short term liabilities;
  • Under the new Coronavirus Bill, commercial tenants unable to pay their rent due to Covid-19 will be temporarily protected from eviction; and
  • The Prudential Regulatory authority set out supervisory expectations that banks should not increase dividends or other distributions in response to policy actions.


On 22 March 2020, Australian Treasurer Joshua Frydenberg announced amendments to the Corporations Act 2001 to provide temporary relief for financially distressed businesses caused by Covid-19.

As a result, the Coronavirus Economic Response Package Omnibus Act (CERPO Act) was passed by Parliament on 23 March 2020.

The amendments introduced by the CERPO Act will apply for a six-month period but may be extended or have effects beyond this timeline. The CERPO Act introduces the following amendments:

  • An insolvent trading safe harbour, constituting a 6-month moratorium on insolvent trading liability for directors in respect of debts incurred “in the ordinary course of the company’s business”;
  • The current minimum threshold for creditors to issue a statutory demand on a company has also been increased from AU$2,000 to AU$20,000 for the next six months;
  • Companies will have six months to respond to a statutory demand. This is an increase from the previous 21-day timeframe which is a precursor to winding up proceedings being commenced by creditors; and
  • The Treasurer has been given instrument-making power to amend provisions of the Corporations Act 2001 to provide relief from, or modify, obligations under that Act.


Following the declaration of a state of emergency on 14 March 2020, the Spanish government introduced several Royal Decree-Laws (RDLs) to mitigate the impact of Covid-19.

The RDLs make the following amendments to bankruptcy and insolvency proceedings:

  • A three-month moratorium on mortgage payments for habitual residence for borrowers experiencing difficulties in making mortgage payments as a result of Covid-19. This moratorium has also been extended to:

(i)    individuals who are professionals or entrepreneurs as it pertains to their professional/ business premises; and

(ii)   mortgages for the acquisition by individuals of housing to be rented when the owner ceases to receive the rent as a result of Covid-19.

  • During the moratorium, lenders cannot demand mortgage payments or any repayments of principal or interest and no interest or late payment interest will accrue;
  • A three-month moratorium on repayments for consumer credit and other non-mortgage loans for individuals experiencing difficulties in making payments as a result of Covid-19, with no interest or late payment interest accruing;
  • Creditors’ petitions for compulsory liquidation will not be allowed until two months have passed after the state of emergency has ended, and debtors’ own filings will be given priority even if submitted later; and
  • While the state of emergency is in effect, debtors are not required to file for insolvency proceedings (within two months of insolvency), even where they applied for protection from creditors under Spanish insolvency law and the stipulated negotiation period has elapsed.

South Africa 

Much like the nations mentioned above, South Africa has embarked on several policy amendments to not only combat the spread of the virus, but also to protect business and individuals from its devastating economic effect, said Cliffe Dekker Hofmeyr.

The most noteworthy legislative measures taken by the South African government thus far are as follows:

  • The Department of Trade, Industry and Competition (DTIC) published regulations in terms of the Competition Act whereby the retail property sector has been exempt from Chapter 2, more specifically, sections 4 and 5 of the Competition Act, which sections ordinarily prohibit entities in horizontal and vertical relationships from entering into agreements or engaging in practices which prevent or lessen competition in the market/
  • Under the regulations, retail tenants and retail property landlords may conclude agreements allowing for rental payment holidays, rental discounts, limitations on the eviction of tenants and the suspension of or adjustment to lease agreement clauses which are restrictive to the retail tenant from undertaking reasonable measures required to protect viability during the national disaster.
  • Similar block exemptions have been issued to the healthcare and banking sectors as well as the hotel industry.
  • The DTIC has also introduced the Consumer and Customer Protection and National Disaster Management Regulations and Directions under the auspices of the Competition Act and the Consumer Protection Act. The aim of these regulations is to protect consumers from unfair, unreasonable, improper or unjust commercial practices in response to a surge in demand during the National Disaster.

It should be noted that government has also introduced a number of employee and sector-specific financial relief schemes, including:

  • The Temporary Employee/Temporary Employer Scheme (TERS);
  • The Business Growth and Resilience Facility will provide working capital, stock, bridging finance, order finance and equipment finance to small businesses which supply in-demand medical supplies like hand sanitiser, with funding dependent on the business’s requirements;
  • The SMME Relief Finance Facility will provide soft-loan funding for existing businesses which are distressed due to the effects of the Covid-19 pandemic. The aid will be available for six months from 1 April 2020, although businesses may apply for a longer period of assistance if additional assistance is required;
  • The SEFA-Debt Restructuring Facility is geared towards SMMEs which are already funded by the Small Enterprise Funding Agency (SEFA) and are negatively affected by the Covid-19 outbreak. SEFA will grant a payment holiday for up to six months;
  • The Industrial Development Corporation has put a package of more than R3 billion together for industrial funding to address the situation of vulnerable firms and to fast-track financing for companies critical to efforts to fight Covid-19 and its economic impact;
  • R200 million in aid has been made available by the Department of Tourism to assist SMMEs in the tourism and hospitality sector who are under particular stress due to the travel restrictions;
  • A number of business-backed funds as well as payment holidays being offered by the country’s banks. However, it should be noted that these are not government-mandated.

Read: 9 things every South African should know about government’s financial relief scheme and their job

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Coronavirus policies around the world – and how South Africa compares